Worldwide Bond Selloff Accelerates

Alex Ossola (0:00)

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ABC is suing the FCC over the challenge to its broadcast licenses. Plus, yields for long-term government bonds are reaching levels not seen in decades. Could that be here to stay?

Sam Goldfarb (0:30)

It's almost like the bond market is normalizing to this pre-financial crisis world where interest rates are higher for longer.

Alex Ossola (0:36)

And the squeeze on federal grant money is pushing scientists to find new ways to fund their research. It's Tuesday, August 18th. I'm Alex Ossola for The Wall Street Journal. This is the PM Edition of What's News, the top headlines and business stories that move the world today.

Disney is stepping up its fight with the Federal Communications Commission. The company's broadcaster ABC today sued the agency and federal court in Washington, DC.

ABC says the FCC's challenges to its broadcast licenses and its push to regulate its talk show The View are illegal. The company says it's an effort to stop speech the Trump administration doesn't like. It's the latest front in a battle between ABC and the FCC that began last year when FCC Chairman Brendan Carr launched a probe into Disney's DEI initiatives. ABC executives felt the probe was really a response to criticism of President Trump on some of the network shows. WSJ media reporter Joe Flint says things have only escalated from there.

Joe Flint (1:36)

The FCC launched what's known as an early license renewal process for ABC and the eight TV stations it owns, including stations in New York and Los Angeles. And that is typically done when the agency is looking to challenge a broadcasters license or perhaps find the broadcaster.

And ABC felt the deck was stacked against them, that the FCC was going to come out with such a ruling and launch a hearing and a probe. And this is ABC's way to try to get in front of that. They filed for a request for a temporary restraining order in district court to stop this process from the FCC.

Alex Ossola (2:16)

Joe says that just that process itself at the FCC has already made things tough for ABC's head.

Joe Flint (2:21)

As long as this is hanging over ABC's head, it makes just running their businesses all the harder.

They said in their suit that it's already had a chilling effect on how they programmed the view and other things they're doing and the cost of the investigation and the time it's taking to answer FCC requests and documents. So all of this ultimately is impacting ABC's ability to operate, they say. And ultimately, yes, it's a very high bar to take away the licenses, but it would drag on for years, and it still may.

Alex Ossola (2:55)

FCC Chairman Carr has said that the license renewal review isn't about speech, he says it's about DEI. In response to the lawsuit, the FCC said it would continue to follow the facts and law.

In other corporate news, American Airlines plans to install screens on the back of every seat on more than 800 planes that fly most domestic routes. It's part of a cabin overhaul that includes adding more rows in first class and extra legroom, all in an effort to catch up to American's more profitable rivals Delta and United.

There's been a slow moving sell-off in the bond market ever since the Iran War started, and yields on long-term government bonds are now at their highest levels in almost two decades. In the US, the 30-year Treasury yield hit a 19-year high today. Other countries, including Germany, France, and Japan, are also seeing yields for long-dated bonds at decade-plus highs. Markets reporter Sam Goldfarb covers bonds for the Journal, and he joins us now. Sam, why is this happening? Because it's not just happening in the US, it's across other developed nations as well.

Sam Goldfarb (3:58)

It's a little bit of a mystery, and probably like 10 different factors, and that just add up to people not wanting to buy bonds, and then they don't want to buy bonds because other people aren't buying bonds. One factor that people have talked about is potentially pushing yields higher, is just like there's large US deficits, that means the US government has to issue lots of bonds, and if there's a lot of bonds that can push down prices of bonds and push yields higher, but then US treasuries are not the only highly rated bonds out there. Corporate bonds add to that supply problem, and so when companies like Alphabet and Metta are issuing $25 billion bonds at a time, the investors that buy treasuries are also the same investors that buy those bonds, and so they're getting a little bit overwhelmed potentially. If you take a step back, what might be happening is that interest rates don't look like they're going lower, and so it's almost like the bond market is normalizing to this pre-financial crisis world where interest rates are higher for longer.